China Fast-Food Scare the Latest Embarrassment For McDonald’s Corp. and Yum Brands Inc.
McDonald’s Corp. and Yum Brands Inc. (the parent company of KFC and Pizza Hut) were both caught off guard on Monday by revelations of another fast-food scare in their Chinese market. The Otago Daily Times tells us that employees at Shanghai based Husi Food Co. Ltd. were exposed during a Chinese TV broadcast picking meat up from a factory floor and mixing meat that had exceeded its expiration date in with fresh product.
After the events broadcast on Shanghai based Dragon TV become public, both McDonald’s Corp. and Yum Brands Inc. have stopped using Husi Food and have switched to alternate suppliers. The Otago Daily Times further informs us that the situation was especially problematic for McDonald’s Corp. and Yum Brands Inc. because the companies are still recovering from a 2012 fast-food scare in which they were accused of purchasing meat that was pumped full of excessive antibiotics. In light of today’s fast-food scare, Yum China released a statement saying that, “We will not tolerate any violations of government laws and regulations from our suppliers.” McDonald’s Corp. released a statement expressing similar sentiments, stating that, “If proven, the practices outlined in the reports are completely unacceptable to McDonald’s anywhere in the world.”
To add insult to injury, the Otago Daily Times tells us that Yum Brands had just seen sales in its Chinese market bounce back from a previous fast-food safety scare and a bird flu outbreak. Now, food industry insiders are expressing serious reservations as to whether McDonald’s Corp. and Yum Brands Inc. will ever be able to regain the trust of their Chinese customers. The same article published in the Otago Daily Times tells us that Benjamin Cavender, Shanghai based principal at the China Market Research Group, stated that, “I think this is going to be really challenging for both these firms.” Mr. Cavender went on to say that, “I don’t know that this is something an apology can fix so easily, because at this point people don’t have a whole lot of trust that they have good systems in place.”
Today’s fast-food scare in China has food safety experts and consumers alike asking the question, could a similar situation happen here in McDonald’s or Yum Brands’ U.S. market? An article published in USA Today tells us that, though the probability of a U.S. fast-food scare is much lower, it could still happen here. USA Today tells us that according to Gene Grabowski, a U.S. food safety expert that has consulted in 150 food recalls, the risk of a fast-food scare has increased here because, unlike thirty years ago, food and restaurant companies no longer own their own supply companies. High costs have forced U.S. based food and restaurant companies to become completely dependent on third party suppliers. Though the chances of a Chinese style fast-food scare are less likely here in the United States because of better government oversight, the fact that more third party food suppliers are thrown into the supply chain mix statistically increases the amount of room for error.
The Inquisitr informs us that the Chinese fast-food market is expected to reach a staggering $293.4 billion in sales by 2017. The percentage of that money to be spent on preventing future fast-food scares and bulking up food safety measures remains to be seen.